Even good products need updating
Wendy's has an established image of quality product and
never-frozen beef, but the menu was rather uninspired.
"Two things drive [the quick-service restaurant category]: One
is continual product innovation, and the other is meaningful
advertising campaigns," said Joscelyn MacKay, senior securities
analyst at Morningstar. Wendy's has concentrated on those two
things since divesting Wendy's .Arby's
Group in 2011 to focus its energy solely on the Wendy's brand,
Even before divesting Wendy's /Arby's
Group , and after Nelson Peltz's Triarc Cos. bought the company
in 2008, Wendy's started massively revamping core products,
including salads, fries and beefed-up burgers. In late 2011 it
launched a mid-tier "W burger."
"They were willing to challenge what they had been doing in the
past and were willing to sacrifice some sacred cows," said Ms.
Yohn, referring to the chain's decision to take its core products
-- such as fries, which weren't exactly considered a menu bright
spot -- and overhaul them to have a more-contemporary offering.
Improve the customer experience
Wendy's is testing more-modern restaurant designs and looking to
compete with fast-casual chains, which generally have better dining
"The bottom line is that [fast-casual chains] offer a better
total experience," said Wendy's President-CEO Emil Brolick in the
most recent earnings call. "The competitive set has changed ... and
we are confident that we can successfully build our brand, build
sales and build profits in this new environment."
McDonald's and Burger King also have contemporary store
redesigns set to roll out in the coming years.
Indeed, Wendy's has benefited from the woes at Burger King, much
like Diet Coke benefited from Pepsi 's issues to become the No. 2
Burger King has struggled with management and ownership changes,
and analysts have said the chain faltered by focusing too much of
its marketing on young men, a demographic hit hard by the
recession. Wendy's seized the moment, made the right changes and
zipped into the No. 2 spot.
However, Burger King is determined to rebound. Last year it
hired Global CMO Flavia Faugeres (Wendy's has been sans CMO since
June), brought on McGarryBowen , and,
to appeal to a broader audience, traded in its King character in
favor of food as the star of its advertising. A new brand campaign
is also expected this year.